IM Selection EOC Q 40 - Fee & Active Return Calculations

Confused about the use of the Breakeven Active Return and the Standard Fee here. I understand how to calculate the Net AR under all of the possible returns except when the Gross AR is 1.25%.

When the Gross AR is 1.25%, the answer key uses the Standard Fee of 0.35 only, and disregards any Sharing fee. But how come it goes back to using the Base Fee + Sharing at 1.75% Gross AR?

Answer Key: